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Axial Closes $2M Financing Round

Today, we are happy to announce that Axial closed a $2M financing round from two leading private investment firms. We welcome First Round Capital, a highly successful early stage venture capital firm, and Windcrest Partners, to the existing group of exceptional firms and individuals who have supported our growth and success. I have known the folks at First Round and Windcrest for many years and could not have asked for a better group to have in our corner. Their collective expertise, relationships, and commitment to the success of their companies is second-to-none. We look forward to working together.

Why We’re Building Axial

It used to be that only large established companies could be confident that there was an exit strategy or financing option for their business. Mid-sized private businesses, despite having real products and millions in annual revenues (unlike their many over-hyped, dot-com “build it and they will come” 3rd cousins), were lucky if they could find their way to successfully exiting their business. All the “bulge-bracket” investment banks, “big 4″ accounting firms and top law firms focused on Fortune 2000 and “hyper-growth” companies, leaving more than 5 million private American companies behind when they consider an exit strategy or seek education and expertise on complex topics like M&A, private company business valuation, negotiation, choosing an M&A advisor, due diligence, writing investment teasers, etc.

Since our inception, Axial has dedicated itself to changing this status quo. By combining Axial’s technology and datasets with our relationships and credibility, we are making the private M&A markets more navigable for business owners and their Advisors and more accessible to the many qualified strategic and financial buyers who participate in this massive and fragmented market category.

Why We Raised Outside Money

Axial’s online marketplace has now helped over 2200 business owners sell their company, enrolled over 1,100 qualified boutique and regional M&A Advisors, and helped private companies close over $2B in transaction value. We’re off to a good start, but the reported global M&A market in 2009 was $3,621 billion. We have a long row to hoe! By joining with First Round Capital and Windcrest, we add exceptional firepower to our team to better understand and serve these markets, we can accelerate our platform’s adoption by the private M&A community, and we gain further financial backing to continue building an innovative and enduring company.

We will use the additional capital to deepen our team, grow our Membership, and improve and accelerate our product development and technology efforts.

Uniqueness

We had a lot of interest from various investors and companies who wanted to support us, and in the process of meeting with all of them, I teased out some things that are unique to Axial that I wanted to share.

First, our belief around how existing private M&A processes are incredibly sub-optimal was unique relative to other companies that also serve our market in different ways. Rather than improving upon the old way of buying and selling companies, our vision is to transform the way in which buyers discover M&A opportunities and the way in which sellers market them to let the entire market operate with less friction and much greater success. Our approach is rooted in innovative marketplace architecture, uniquely-customized information disclosure paradigms, proprietary datasets and algorithms, and an exceptional commitment from our team to helping our Members’ succeed.

Second, our 300+% revenue and Member growth in the last 18 months, in spite of an unbelievably anemic M&A market, seemed to stand out as we shared our story. Third, our eHarmony-inspired web interface seems to be so simple yet powerful that both experienced Members and first-time Members were immediately seeing the value and utility of Axial Membership. In many cases, this has led business owners who were previously on the sidelines to feel emboldened and empowered to take charge of their company’s exit strategy, and enabled corporations and investment firms to initiate or scale their M&A deal sourcing activities efficiently and quickly.

Why First Round Capital & WindCrest?

There are a few reasons. Shared Vision: When we visited with them, both firms clearly saw the leverage and value that internet-enabled technology could bring to the notoriously offline and inefficient world of private M&A. Experience: Howard Morgan and Josh Kopelman have tremendous track records building, backing and advising marketplace-driven businesses, including Half.com (sold to eBay), AngelSoft (the leading marketplace for sourcing and managing angel investments), and others. James Gellert at Windcrest is repeatedly referred to by CEOs as the most valuable member of the Board of Directors on complex CEO issues. Values: At Axial, we recruit individuals who have an uncommon combination of integrity, passion for entrepreneurship, a whatever-it-takes attitude, high commercial aptitude, and a desire to win. In partnering with First Round and Windcrest, we have found investors who hold themselves to that same standard.

Thank you

I want to take this opportunity to thank several people. First, I want to thank Howard Morgan, Josh Kopelman, the whole First Round team, and James Gellert and William Fitzgerald at Windcrest for their respective commitments to our success.

I also want to thank Mark Gerson, my partner in this venture from the start, our many devoted angel investors, and Gerson Lehrman Group, my former company, for its tremendous support and early faith in my vision for Axial. I also want to thank Andy Rachleff and Joel Peterson, my professors at Stanford, for their wisdom, inspiration, and steady guidance.

Thank you to the entire Axial team, which has worked so hard to put us on the map and which I know will take us the distance. Finally, thank you to our Members, the thousands of business owners, corporations, investment firms and entrepreneurs who are rooting for us, who have validated our business vision through their success with our platform, and who inspire us to continue our mission.

 
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